 Personal finance practice problem using OneNote. Comparing health insurance policies. Prepare to get financially fit by practicing personal finance. You're not required to, but if you have access to OneNote, would like to follow along where the icon left-hand side practice problems tab, the 9080 comparing health insurance policies tab. Also take a look at the immersive reader tool to practice problems oftentimes in the text area too, with the same name, same number, but with transcripts. Transcripts that can be translated into multiple languages, either listened to or read in them. Information on the left-hand side, we are imagining an employee who works for an employer that offers three different options for the medical insurance plans. We're gonna be running a comparison based on prior medical costs, noting that in practice, this would not be the only kind of thing we would want to rely on in order to make a decision. We might also want to look at the flexibility of the network for example, but this is one thing that we might take into consideration. So we've got A here, Private Insurance Company Plan, monthly premium at $60 for doctor-off-it visits, prescriptions, and major medical charges. He will pay percent, 25% over the deductible. The insurance company paying 75%, the deductible is $800. And then B, we've got the HMO, so remember that one typically has the more limitations on the network, but oftentimes could have smaller fees related to it if you're staying within networks. So you've got that network kind of consideration as well as the cost consideration. So we've got Free of Charge because it's offered by the employer. The company copayment for doctor's office visits and major medical charges is $30 because they're inside the network if you're working with people in the network. Prescription copayments are $20. HMO pays percent after the copayment, no deductible for the HMO. And then C is the POS, kind of a hybrid type of option, point-of-service plan, monthly premium is $40. And if using healthcare provider in network, same copayments as with the HMO, no deductible. If using healthcare provider outside the network, out-of-pocket percent, 20% deductible $800. So we're gonna imagine then that we have prior data in terms of medical costs, visits to the general physician were seven in prior years. The cost each visit is $160. We also have two prescription drugs, one at 80, one at 110. Using that data, we'll try to project into the future to see what the costs will be in the future, noting again that this is only one kind of thing you might want to take into consideration because there's differences in flexibility between these plans in terms of who you can go to for your doctor and network versus out-of-network kind of considerations. Okay, so we'll start off up top here. We've got the annual medical costs for, are gonna be seven physicians. So we had seven visits last year. And we said that the cost for each visit was $160. So that means the cost for the general physicians for the year, we're gonna say 1,120. We also had the prescription drugs, which we said two of them for 80 and 110. That gives us the 190. That gives us total annual medical costs of 1,310. So let's look at that and compare it to the personal annual costs for A here. So we're gonna say the yearly premium, the yearly premium, notice I have a colon. We're gonna indent it. It's good to use and work on tables and Excel as we go through these is gonna be $60. So $60 months in a year are 12. That means we're gonna be paying for the year, the 720 for the premiums out of pocket costs over the deductible. So we've got this deductible of $800. So I'm gonna say we had the total cost, 1,310 minus the deductible of the $800. Notice that you want to be setting this up so that you have your data on the left-hand side and you can change the data and rework your problem here automatically running different scenarios. So the cost over the deductible, 1,310 minus the 800 is 510 and then we've got the percent out of pocket. That's at 25% out of pocket because the insurance company's gonna be paying 75% for the amount over the deductible. That's gonna give us the 128 out of pocket costs over the deductible. So then we're gonna look at the cost up to the deductible, meaning this is how much we're paying for the deductible and that's gonna give us our total down below. So if I pull out the trustee calculator just to recap this, we have the premiums that we're gonna be paying 720 plus we've got the out of pocket costs over the deductible that we're gonna have to pay 128 plus we have the deductible at 800. So that would be the 1648. Now note, of course, if you wanted to adjust everything here and you wanna make your tables work, if this number, your total costs ends up to be below the deductible below 800, you might use a logic function, like an if function in order to say, I don't want this number, for example, to go below zero and you might use say amen function down here to say that this number, if it was below $800 should be the lesser of the $800 or the annual cost, the lesser of, for example, these two items. Okay, so then we've got the HMO, which is usually kind of a straightforward item. The, our employer is gonna say that they're gonna handle the premiums on the HMO. So we don't have to deal with that. We got the visits to the physician at seven, they co-payment now at $30 because we're gonna imagine that we're going to a doctor that's in network. Obviously, if we had a doctor that's out of network and if that's a problem for us, then that's another consideration that we have to take, that whole network kind of situation. But if we're in network, we're gonna say that's gonna be the 210 cost of office visits and then the cost of prescription drugs, we said we had two of them and they're at $20. So we're gonna say that comes out to $40 and so the 210 plus the 40 comes out to 250. So clearly we're lower on the HMO, but we also note that there's a little bit less flexibility with the HMO. We wanna make sure that we have our doctor or is our doctor in the network and how important is that and so on. So then we've got the POS. This is going to be the point of service plan. It's kind of like a hybrid one. We're gonna alter this one a little bit just to make it a little bit more complicated. So for example, we've got the monthly premiums of $40. So we're gonna have to pay the premiums on it. The months are gonna be 12. So it's a little bit less on the premiums. That's gonna be the 480 for the year on premiums, cost over the deductible if any. So we're gonna have the 160 and then the number of visits at seven. So we've got the total costs for visits. Now note, right here it says if using healthcare provider in network, same co-payments as with the HMO, no deductible. We're gonna assume that we're out of network and that we wanna keep our own doctor just to make it a little bit more complex. So if using healthcare provider outside network out of pocket percent after deductible is 20% and the deductible is 800. So we're gonna look there. We're gonna say then the total costs are gonna be 120, the deductible are 800. That's gonna give us the cost over the deductible of 320. And then we're saying that we're gonna be paying 20% of that out of pocket. So 20% of that out of pocket. So 320 times 20% is gonna give us the 64. Now it's a little bit different than the first one up top because we didn't add the prescription drugs in it. And so we're gonna say that on the prescription drugs we're gonna have the same as with the HMO to mix this up a bit. So cost of the deductible is $800 that we're gonna have to pay. And then we've got the prescription drugs out of pocket. So we have two of them. And we're gonna say those are at $20. That's like the HMO. And so we've got then $40 for the prescription drug. So if we add this all up then we've got the total POS medical costs of the 1384. That being the premiums of the 480 plus the 64. 64 out of pocket costs before deductible plus the deductible plus the 40 for the prescription drugs gives us the 1384. So we made that one a little bit more complicated on purpose to kind of show it's kind of hybrid nature. So it comes out as you would kind of expect the 1,648 up top being the highest one. This is the one where you would think you might have the most flexibility possibly outside of the network but the one that costs more typically you've got the HMO which the employer says they'll pay for the premiums of so it's gonna be clearly the cheapest then. And then we've got the item down here but that has the network issue which is kind of a hybrid that's kind of in the middle of the 1384. Now obviously you could run different scenarios and say well what if my costs were higher or what if my costs were lower and this is one tool that you can use a similar kind of worksheet if you had a similar kind of comparison to try to figure out how much cost it would be using basically comparable plans and use that then to consider as well as considering the flexibility of the plans in some way shape or form obviously the more we can put down into numerical preferences the better so we could say well one costs more than the other but then I gotta figure how much is that worthwhile to me in comparison to the flexibility of say an HMO to a more flexible plan more like a PPO type of plan can I use my doctor and the HMO how much do I value that as well so we do do these in Excel so if you wanna work in an Excel you could take a look at that.